Aveo Pharmaceuticals Inc (AVEO) 2011 Q2 法說會逐字稿

Thank you for holding for AVEO Pharmaceuticals' Second Quarter 2011 Financial Results Conference Call. At this time, all participants are in a listen only mode. Following the formal report, AVEO management will open the lines for a question and answer period. Please be advised that this call is being taped at the Company's request and will be archived on the Company's website for two weeks from today. At this time, I would like to introduce Ms. Monique Allaire, Associate Director of Investor Relations. Please go ahead.

Thank you, Operator; and good morning, everyone. Thank you for joining us on the call today. With me are Tuan Ha-Ngoc, our President and Chief Executive Officer, and David Johnston, our Chief Financial Officer.

Earlier this morning we issued a press release detailing our second quarter 2011 financial results, which is available on our website at AVEOPharma.com. Please note that all information discussed on the call today is covered under the Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995.

During the call today, we will be making forward-looking statements that involve risks and uncertainties, including statements about AVEO's future expectations and plans, including clinical development, time lines and commitments, financial projections and the potential success of our product candidates. These risks and uncertainties are described in the Risk Factor section of AVEO's most recent quarterly report on Form 10-Q filed with the SEC and available online at SEC.gov.

All of the information in this conference call is accurate as of today, July 28, 2011, and should not be relied upon as representing AVEO's views on any date in the future. While AVEO may choose to update these forward-looking statements in the future, we disclaim any obligation to do so. With that, let me pass the call over to Tuan.

Thank you, Monique; and thank you all for joining us this morning. I am very pleased with the progress we made so far this year toward our goal of building a sustainable oncology company. Last month, we successfully completed an [underwritten] public offering raising net profits of $104 million. Dave will discuss the raise in more detail in just a bit, but let me preface by saying that with this additional cash resource we are further positioned to make the right decisions at the right time in driving our programs forward.

We are continuing to invest in success of our lead product candidate, Tivozanib. As you know, Tivozanib is in a pivotal Phase III trial, called TIVO-1, for the potential restoration in advanced renal cell carcinoma, or RCC. We are confident in a design execution of this study and anticipate top line data in the fourth quarter of this year, at the earliest.

Beyond RCC, Tivozanib has demonstrated the ability in multiple Phase III - Phase Ib trials to be combined with both targeted therapies and chemotherapies while maintaining its promising safety and tolerability profile.

We have reported early clinical trial data demonstrating the safety of Tivozanib in combination with certain agents in breast and colorectal cancers, as well as in RCC. With our partner, Astellas, we are on track to expand the development of Tivozanib into breast and colorectal cancers later this year, notably independent of the results of TIVO-1 data. These studies will be large, combination studies that will, we believe, position Tivozanib to be competitive in the changing treatment landscape in those indications.

Following on Tivozanib's heels, our most advanced and wholly owned antibody program, Ficlatuzumab, an inhibitor of HGF ligand, which is a sole ligand to the c-Met receptor, is making good progress. Ficlatuzumab is the first candidate coming directly out of our proprietary cancer biology and Human Response Platform. We believe it demonstrates how our platform can be used to evaluate oncology targets, like HGF, as well as to develop antibodies directed to those targets.

At this past (inaudible) we reported the completion of enrollment of 188 patients in the Phase II portion of an open-label Phase Ib/2 study, evaluating Ficlatuzumab in combination with Iressa, versus Iressa alone. This study is being conducted in Asia in first-line non-small cell lung cancer and includes a balanced population of patients with Y-type EGFR, as well as with patients with sensitizing mutations.

Results from Phase Ib portion of this trial show that Ficlatuzumab has been well-tolerated and demonstrated clinical activity when combined with Iressa in patients with non-small cell lung cancer. We expect to report from this Phase II trial in 2012.

We have already started investing the future of Ficlatuzumab, including beginning to prepare for large scale process development and manufacturing to support future clinical investigations such as Phase III development in non-small cell lung cancer, and clinical trials in other indications.

Our third candidate is AV-203, another product directly resulting from our platform. AV-203 targets OB3, which is believed to play an important role in multiple cancers. As a reminder, pursuant to our 2009 license agreement, Biogen Idec has an option for rights to our anti-OB3 program in the territory outside North America with such option to be exercised at the time of Proof of Concept Data.

We are on track to initiate Phase I development with AV-203 in 2012, and, indeed, our team recently initiated the GLP toxicology work as the key step towards that goal. This initiation triggered a $5 million milestone payment from Biogen.

Another (inaudible) event for our unique monoclonal antibody capabilities and our Human Response Platform was the recent establishment of an exclusive licensing agreement with Centocor Ortho Biotech around our RON antibody program. Not only did this agreement allow us to move forward in this program, while monetizing this asset, we believe it also provides further validation of our antibody R&D capabilities and of the RON pathway as a promising target for cancer therapy.

As you can see, our antibody expertise and our Human Response Platform together are an integral part of building AVEO into a sustainable oncology company beyond Tivozanib and Ficlatuzumab. We believe it is and will continue to be a core component with preclinical, clinical, and commercial success.

As we advance all of our programs, we intend to continue leveraging our platform as we strive to bring our products to the most appropriate patients who will benefit most. With that, let me turn the call over to Dave to review our recent financing in our second quarter financial results. Dave?

Thanks, Tuan. And good morning, everyone. Since we issued a press release this morning outlining our second quarter 2011 financial results, let me just review the highlights and then I'll speak to the balance sheet and where we expect that to take us.

Our collaboration revenues for the second quarter of 2011 were $26.6 million, compared with $15.6 million in the second quarter of 2010. This was primarily due to an increase in revenue recognized in conjunction with our collaboration agreements with some of our strategic partners. Specifically, we recorded $11 million in revenue from OSI, which is primarily related to recognition of deferred revenue in connection with their $25 million option exercise from November of 2010.

We've recorded $7 million in revenue from the Centocor Ortho Biotech collaboration for our RON program license agreement, which part of the total $15 million initial payment comprised of an upfront payment and an equity investment. And we recognized $5 million from Biogen Idec for the achievement of initiating GLP [toxic] studies with AV-203.

Research and Development expense for the second quarter of 2011 was $25.1 million, compared with $26 million for the second quarter of 2010. As a reminder, 50% of Tivozanib's development costs are now reimbursed under the cost-sharing provisions of our agreement with Astellas, which accounted for part of this decrease.

In addition, there were lower Tivozanib-related costs in the second quarter of 2011, compared with the second quarter of 2010, which, as you recall, is when we had a $9.1 million purchase of Nexavar, which is a comparator agent being used in our TIVO-1 trial. These decreases are partially offset by an increase in Ficlatuzumab-related costs, mainly due to our expensing of $9.1 million this quarter for the purchase of drug supplies that was paid to Merck. And, as a reminder, we actually paid for the full $10.2 million of drug supply to Merck during the first quarter of 2011.

G and A expense for the second quarter of 2011 was $6.4 million, compared with $3.8 million for the second quarter of 2010. The increase in G and A expense was driven by an increase in personnel-related costs as we continue staffing up the company to prepare for the NDA filing and potential market launch of Tivozanib, as well as an increase in pre-commercial activities for Tivozanib.

Net Loss for the quarter was $5.7 million, resulting in a basic and diluted loss per share of $0.16, based upon $36.8 million weighted average shares outstanding. Before I turn to the balance sheet, let me provide a high level overview of our recent equity financing. In June we successfully completed a follow-on offering raising $111.2 million due to sale of approximately 6.4 million shares of AVEO common stock at $17.50 per share, including the exercise of the over-allotment. Net proceeds to AVEO are $104.2 million, and for modeling purposes we now have approximately 43.1 million shares outstanding.

We plan to use these proceeds from this offering to prepare for success within our programs, specifically we're investing in the success of Tivozanib by expanding the program into additional cancer indications and combination studies. In addition, we're strengthening and expanding the resources needed to prepare and execute a first-class NDA filing. We also want to prepare the market for Tivozanib with high-quality medical affairs teams in place to education renal cell carcinoma key opinion leaders in the prescribing oncologist community.

In addition, we're investing in the future of Ficlatuzumab. The additional funds raised will allow us to initiate manufacturing and related activities in a timely manner in order to have Phase III and commercial supply of Ficlatuzumab ready as we plan for continued clinical development.

Thirdly, we're investing in the advancement of our antibody programs led by AV-203. With Phase I development for AV-203 expected to begin in 2012, we're accelerating our manufacturing initiatives so that we can broaden and expand the clinical development program.

With the net proceeds from this financing, we ended the second quarter with $296.8 million in cash and marketable securities. And we're updating our financial guidance today. We now expect to end 2011 with at least $230 million in cash and marketable securities. And based upon our current operating plans, we expect that this capital will provide a sufficient cash runway beyond 2012, during which time we anticipate achieving multiple key development milestones in all of our programs. So, with that, let's open up the call for questions. Operator?

Your first question comes from the line of Geoff Meacham, representing JPMorgan. Please proceed.

Hey, guys, thanks for taking the question. Just a couple of ones. I know in the press release there's nothing on TIVO-1. But I'm assuming that the RCC timelines are still as expected. Are there any subtleties in the timelines for release of the TIVO-1 data?

Good morning, Jeff. This is Tuan. As I mentioned in my opening remarks, we are still looking for data reaching that number of events in Q4 at the earliest. So, no difference that we have seen.

And then when it comes to the new capital - I know Astellas will contribute some of the costs here, but how are you guys thinking about the priorities today? I know you're looking at breast and colon; but does the additional capital give you any change in preference, or does it make you any more - change your priorities a little bit? And do you want to expand to other indications, going into Phase II for Tivozanib, now that you have additional funding?

I think in the opening remarks, Dave touched upon the (inaudible) process. I think that our priorities go first to continue to build out the infrastructure to support the filing and eventual commercial launch of Tivozanib. Also, in preparing us for success in the Ficlatuzumab program, as we mentioned. It is an open-label study.

And we will be in a position, particularly with the additional cash resource, to make the right kind of investment with the cost of large scale process deployment and commercial manufacturing investment so that we can be best positioned for later development into Phase III and other indications as well. And, of course, the two or three came right after that. And so all of that is really was the key, the reasons behind the raise that we completed in June. And we stay exactly on track with those investments.

Thanks.

Your next question comes from the line of George Farmer representing Canaccord Adams. Please proceed.

Good morning, guys. Thanks for taking my questions. Tuan, can you comment a little bit on [cycle 2] a bit more. It is an open label study, this Phase I-2. And you are committing to develop the manufacturing capabilities with cycle 2 med. Does that mean you like what you see so far? Can we read into that?

I think that the benefit of open label is that from time to time we get a chance to take a look at the data. And particularly in this situation, as you know, it is important to look at the data in context, not just an overall response, overall (inaudible), but also with regards to the bio markers, whether it is EGFR status or the c-MET level.

And we will have the opportunity to do that prior to the point in time this Fall where we would need to pull the trigger in making the first phase investment in large scale process involvement. Of course, it's not complete data by that time, and complete data, we mentioned, would be presented in 2012. But at the time we plan, we need to make those investments in large scale process involvement and manufacturing, I believe that we will have reasonable amount of data to make an educated decision.

On the treatment landscape for metastasis renal cell, is it possible, based on your intelligence, or have you thought about, what would happen if (inaudible) got a broad label - well, the first part, is it possible that they could get a broad label, do you think; and what would be the implications of that?

I think that we certainly don't want to speculate what kind label any of our competitors may or may not get. I think that what we are focusing on is what are the medical needs. And we believe through our research, but also in discussion with both thought leaders and community oncologists that there are two very clear medical needs. One, is that so far, products on the market or in development have not shown a BFS that exceed a year.

Number two is that coming from marketed products as well as product development, including [axcebanib], the tolerability profile is still a key obstacle to keep the patients on therapy. And based on our very large Phase II study, we feel confident that our Phase III will show that, in both counts, that TIVO would fulfill those very important needs for the patients. So we are very confident, regardless of the level of label with this compound or another compound that TIVO would be extremely competitive.

Thanks very much.

Your next question comes from the line of Jason Kantor representing RBC. Please proceed.

Thanks for taking the question. I'm just wondering, with your reiterated timing guidance for TIVO-1, does this come following any recent look at the current event rates that are coming out? Or have you just not looked at it since the last time you gave the guidance?

Good morning, Jason. Yes. We did have one additional look very recently at a number of events. And we continue to maintain the same guidance.

And then just so that I'm clear, when you talk about results in Q-4 at the earliest, are you talking about hitting the number of events or are you talking about actually being able to release data publicly?

We're primarily talking about reaching a number of events. As you know, there will be a period between six to eight weeks to make sure that we query all the aspects and then (inaudible) all the data. And then, also, look into - after we un-line the data - into the data analysis. So, probably look for six to eight weeks between the time we reach the number of events and the time that we'll be able to have the data - the top-line data, at least, to be able to communicate.

Great. And then with regard to the large colorectal and breast cancer trials that you're planning, you mentioned starting in 2011. Is the anticipation that you would start both of those trials in 2011 or just one of those trials in 2011?

Our current plan still shows the initiation of both of those trials in 2011.

Thank you very much.

Your next question comes from the line of Thomas Wei representing Jeffries. Please proceed.

I just wanted a reminder again. When you look a the literature on renal cell carcinoma, what is your interpretation of what the typical drop-out rate would be in a Phase III renal study?

Good morning, Thomas. The range of drop-out goes in the mid-teens to the mid-twenties, with one exception, one study that went all the way to 40-some percent, about which I don't think should be used as a point of reference because of a peculiarity of that particular study. So, I think the range we're talking about is in the mid-teens to the mid-twenties.

And can you give us any help on health factors like the drop-out rate or, say, the discordant rate on progression assessment has lurked in the TIVO-1 study relative to maybe what you had originally designed the trial to show?

As you know, we'd rather not give interim piecemeal data. The only thing we can say is that it stays within what we had anticipated, but also within the mid-teens, the mid-twenties, the number that I just mentioned to you.

That's very helpful. Thank you.

Thank you, Thomas.

Your next question comes from the line of Howard Liang representing Leerink Swann. Please proceed.

Thanks very much. Regarding AV-299 data, I think now the timeline is for 2012 rather than, I think, previously it had been the early part of the first quarter, early part of 2012. Is that a change, or is that just encompassing different types of data releasing over time?

It does not represent a change.

And then, if I could, ask you about how you think this program will move forward in the two different populations so that whether you tap for mutant positive or wall type patients. If it's active in the mutant, I think it's fairly clear that would be first line on top of either [tarsivo] or Iressa, if its activities seem primarily in the wall type, how would you develop the drug?

Howard, a very good question. But I think that question has to be based on the end, what the data looks like. As we said, there are two key bio markers that we looked at. One is the EGFR level, so one type could be activated with synthesizing mutations, or both. But also there's depending on the c-MET level. And I think that there could be something very interesting.

And the field has started to show that there are data that could be used to drive the thinking about the therapy in that arena. So, I guess at this point in time, it's hard to speculate where it might be. I think that as we start to see more data ourselves, we'll be formulating our own strategy. And, of course, we have to wait for the final data to define exactly what we're going to go for Phase III, or what we're go for additional Phase IIs.

And if I could just stay on the topic - how do you see the difference between the sort of three mechanisms targeting the same access, either a small tyrosine kinase inhibitor, targeting a receptor, tyrosine kinase, or antibody against the receptor which (inaudible) approach that you have with 299?

I think that in this instance, and as I mentioned in my opening remarks, HGF/c is a sole ligand to the MET receptor. But it's correct that there are right now three different points of intervention. The data would lay out whether there is any difference in observed clinical outcome of each of those three clinical receptor interventions.

We have observed in all the instances, for example, in the HGF itself, that there's a slightly different profile between the antibody versus the small molecule modality. So, I think that at this point it's too early - speculation, potentially, in terms of different tumor settings in which maybe there are low MET but high HGF in the tumor itself, in which case - if that's the case, it might be that attacking and inhibiting the HGF, may be a better intervention.

So, all depending on the clinical outcome of the study, and that's why we're being very careful to - primarily two things - we have powered the study to be 188 patients so we have enough patients in each of the quadrants as we look at that so we can have a more educated information about where to go next. And, secondly, that we make sure that we have both the HGF level, the c-MET level, and both expressed in the [ICH] as well as [Fish] so that we can understand fully and be able to be in a position to interpret the data in a more scientific manner. But I think that there might be some difference in profile, but the key would be the clinical data.

Thanks very much.

Thank you, Howard.

Your next question comes from the line of [Chris Richard] representing Merlin Nexus. Please proceed.

Thank you, Tuan. Two quick questions. The first is can you give any guidance on when we'll see the data from the current 951 and Xeloda Phase I study? And secondly, just a follow-up to Thomas' question on the discordant rate. The events that you're seeing are from - or as judged by the investigator, or are you seeing the events from the central review?

Good morning Chris. Let me start with the second question. The only thing that truly matters in the eyes of regulatory authorities are the independent rate. So, the event that clearly drive the unblinding of data would be that, not of the investigator. So, that number events would be the net result of both the drop-out as well as the discordance. And so based on the most recent look, we are very comfortable of where things are. Nothing unusual. And that's why we stay with our current guidance.

As to the answer to the first question with regards to the Xeloda combination, I think at this point in time it is still too premature to think about when we're going to have the data. This study was initiated late last year and we continue to explore the combination at different dosing. So, depending on how those things will progress, maybe later in the year we can guide in terms of the timing of the data.

So, no data for [San Antonio] is kind of what I'm hearing?

We don't know at this point yet.

All right. Thank you, Tuan.

At this time, there are no further audio questions. I would now like to turn the call back over to Mr. Tuan Ha-Ngoc for closing remarks.

Thank you. In conclusion, we continue to make progress on all of our goals and on our mission to discover, develop, and commercialize new medicines for better lives for patients with cancer. We are quite excited for and confident in the events coming in the next twelve months as we continue to lay the foundation for future success. So, thank you very much for your continued support. Have a nice day.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. And have a great day.